Europe on verge of deflation

[DOR]

Define credible agency. ECB looks like one. At least around here you can't find one more credible, anyway.

How about an example?
The Federal Reserve Board of the United States of America.

[Doktor]

How about an example?
The Federal Reserve Board of the United States of America.

Are we talking USA or Europe? By the title I was under impression we talk Europe.

[DOR]

Are we talking USA or Europe? By the title I was under impression we talk Europe.

The last couple of comments were about QE.

[snapper]

How about an example?
The Federal Reserve Board of the United States of America.

Whether you speak of the credibility of the Fed, the ECB or the BoE you must ask yourself this question; which of them foresaw 2008? Our economist friend DOR assures us that the 'The Federal Reserve Board of the United States of America', perhaps because of it's grand title, is credible but if one to be brutal in searching for credibility perhaps we should ask all our would be saviors where they forewarned of this disaster the magnitude of which they are so eager to impress on us? Were the lookouts asleep on the bridge of the Titanic? Was it foggy perhaps or did they just accept the weather reports that said there were no icebergs and all went off for a jolly good meal washed down with vintage claret? Of all the thousands or even hundreds of thousands of 'expert economists' - educated at vast expense and payed lavish salaries for their wisdom, those that predicted the 2008 'iceberg' could perhaps on the fingers of both hands. One might ask how these 'learned and wise' central bankers, who have taken it upon themselves without any public consent to act as bankers for the entire world, have managed to stay in their jobs? If they are our bankers and have lost us money shouldn't we able to sack them or at least change banks? Why haven't they been packed off back to school to analyse where they got it so wrong? Why are we still forced to endure their evident mismanagement? So they can rebuild the economies they wrecked? It could be argued that they should forfeit this right... and the right to escape prosecution too perhaps. How many lost their jobs? How many have payed for proven illegal activity worse than a shoplifting mother trying to feed her children? It seems their law is unequal as is job protection; if the tea boy brings coffee he's gone - if the economists and central bankers get it wrong and plunge entire nations into de facto insolvency nothing happens - they are retained and claim to be saviors. Why did it happen? They will tell you - it is always the way - that it went wrong because they did not have enough power. So with a great cry and hue due to popular demand ever greater powers and more solemn titles and rituals are accorded to precisely those who got it wrong.

I will say freely that I did not 2008 coming; in fact it was only because it happened that I thought maybe I should start learning about how this stuff works and why it goes wrong. Everything I have seen done or argued by DOR and other apologists suggests that far from admitting they got it wrong they wish only to repeat the same mistakes - but more! It wasn't the structure or the methodology or the theory that were wrong; just the volume and the timing. Credibility for the economist is an excuse to keep his/her job when they should be sacked. I do not believe them, nor frankly do I believe those central bankers who have mismanaged the fortunes of the planet; I renounce their right to manage my money without my consent. A pygmy shrugs you will say and you are right but avalanches start with one snowflake.

[DOR]

Whether you speak of the credibility of the Fed, the ECB or the BoE you must ask yourself this question; which of them foresaw 2008?

Certainly that’s one very important measure of competence. Another is follow-up action.

. One might ask how these 'learned and wise' central bankers, who have taken it upon themselves without any public consent to act as bankers for the entire world, have managed to stay in their jobs?

“Without any public consent” ? Last time I checked, the Federal Reserve Act of December 23, 1913, was still in force.

If they are our bankers

They aren’t.

How many lost their jobs?

Are you implying that the Fed is the sole agency responsible for economic management? If so, what role would you say the Executive and Legislative branches are supposed to play?

DOR and other apologists

Disagreeing with you doesn’t make me, or anyone else, an apologist. Pointing out where your facts or data are wrong is merely educational.

I renounce their right to manage my money without my consent.

OK. Declare sovereignty, make it stick, and go for it!

[cyppok]

"Europe Considers Wholesale Savings Confiscation, Enforced Redistribution"

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution | Zero Hedge
Exclusive: EU executive sees personal savings used to plug long-term financing gap | Reuters

In a nutshell, and in Reuters' own words, "the savings of the European Union's 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says." What is left unsaid is that the "usage" will be on a purely involuntary basis, at the discretion of the "union", and can thus best be described as confiscation.

Generally when you confiscate capital(savings) and use it for banks to shore up government spending through buying gov't bonds through banks and essentially amortizing the losses accrued due to the negative returns those bonds and capital rationalizations by those same banks you do several things.
1) you shift productive capital one that could be used for consumption or investment into unproductive capital
2) you expand the money supply for banks and governments but you shrink it for the economic circulation on the ground for producers and consumers
3) asset prices do not adjust lower because the bidding purchasing power is essentially stolen from those whom could choose on what to bid to those whom already chosen and bid up wrongly and too much intertemporaly at a prior time but wish to continue to hold the upper hand in the negotiation with future purchasing power holders in the future.
4) in the short term you essentially destroy capital bidders other than those that get the transfusion of capital, and while this creates a collapse in some assets it allows those holders to purchase them to expand their overall asset base. This creates a severe long term deadweight loss. Ergo imagine Spanish banks being given more capital to buy more Spanish bonds which allows them to curtail unloading 100s of thousands of houses they hold empty and in degrading condition of market due to price collapse. Not only do they prevent use of that housing ensuring its depreciation through upkeep shortage but their bidding power precludes future amortization of those prices and rationalization of those units by the population at large.
This also prevents more productive use of those assets by the population, faster household creation by Spaniards, more families formed and fertility rates. Goods like washing machines, furniture, and other assets not being bought because those families don't exist or have no space and many other accretive aspects. All forgone because the current asset holder is being saved from collapse.

The other aspect people ignore is if anyone ever read something on Soros. His reflexivity aspect is in my mind the accretive strain on that deadweight loss and accumulated waste burdened on the past/future/present population underneath through various burdens. When it snaps back and fundamental expectations change through collapse, the underlying shift will be a systemic shape-shift. Ergo the outpouring of houses onto the market en-masse won't be met with delirious buyers snapping them all up at fire sale prices(en masse at least). There won't be an equilibrium then just like there isn't one now. Markets will be distorted just in a different way.

[snapper]

IMF 'discussion paper' on a 10% wealth tax; http://www.imf.org/external/pubs/ft/...pdf/fm1302.pdf